I have no idea what’s going to happen next week. AAPL reports after the bell Tuesday and that could set the tone for the rest of the week. As usual, earnings are “Better than expected,” but of course that’s just all smoke and mirrors.
The market is making things tough to read. Every other day SPY and IWM break below their respective rising trend lines in the 60min time frame only to some how recapture the trend line the following day. On Thursday both IWM and SPY closed significantly below their trend lines, but on Friday, while they still closed below those trend lines, they closed closer to the trend lines.
So this means, what? Short them? Buy them? IMHO, neither bulls nor bears have any advantage over one another. You might as well toss a coin.
I’m going to continue to focus on the 60min charts until a solid trend or move materialises. Once that happens, then the trend should become apparent and should then begin to reveal itself in the daily charts. But we’re not there yet. The 9EMA crossed down through the 20MA in the first week of April for $SPX, $RUT, and $INDU giving a ‘sell’ or ‘avoid’ signal. The 9EMA remains below the 20MA, though the 9EMA has flattened out. Maybe it will cross up through the 20MA next week. Maybe not. Until then, just have to keep watching 60min charts for clues about market direction, IMHO.
60min chart of IWM showing it hanging on just below the rising trend line. 60min chart of SPY and DIA look about the same. Q’s? That’s another story. Anyway, as long as IWM/SPY/DIA don’t put in new lows next week, then I will probably move the trend line to accommodate this past week’s action. On the other hand, if there are new lows then I’ll probably have to toss that rising trend line and fit the chart with a new down trending line.
Edited that same day to add: In order for IWM to recapture the rising trend line, it’s going to have to get above 80.60. Since the trend line is rising then by the end of the day IWM would have to be trading around 80.75. Of course, that would be in a perfect world. Close may be close enough. Just have to see.
Also, take a look at the stochastic and at the very clear W pattern. The stochastic looks to be in the process of completing the A part of that W-A pattern. If that turns out to be the case, then IWM and the stochastic should turn up within a couple of candles come trading Monday.
I mean it when I say that at times like these cash is king.
Be careful. Other than for the purposes of day trading, there may not be another good buying opportunity until late summer or maybe the fall, just like 2010 and 2011.